Genpact profit declines 12.6%, lowers revenue forecast to 16%

Feb 11 2013, 13:06 IST
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Genpact Genpact
SummaryBPO major Genpact today posted a decline in profit to $53.4 million for the fourth quarter.

BPO major Genpact today reported 12.6 per cent decline in net profit at USD 53.4 million for the fourth quarter ended December 31, 2012 and lowered revenue growth forecast for 2013 to 16 per cent.

This company had reported a net profit of USD 61.1 million for the December quarter of 2011.

Revenues for the quarter under review stood at USD 507.7 million, up 14.7 per cent from USD 442.7 million in the same period of the previous year.

The company follows January to December fiscal year.

The Nasdaq-listed company's net profit for full-year in 2012 declined 3.3 per cent to USD 178.2 million from USD 184.3 million in 2011.

The company attributed fall in full year profit to special dividend payouts. It paid a special cash dividend of USD 2.24 per share, aggregating to about USD 502 million, from its sale of shares to Bain Capital Partners.

In August last year, Bain Capital had bought a combined 30 per cent stake in Genpact for USD 1 billion from General Atlantic and Oak Hill Capital Partners.

The special dividend was funded through a combination of surplus cash on Genpact's balance sheet and a portion of the proceeds of borrowings under a new USD 925 million senior credit facility.

"The costs and expenses associated with the above transactions are reflected in Genpact's results for 2012, and adversely impacted net income for the year," Genpact President and CEO N V Tyagarajan said.

Genpact's revenues in 2012, however, grew nearly 19 per cent to USD 1.9 billion.

It had about USD 477.5 million in cash and cash equivalents and short-term deposits as of December 31, 2012.

The company, however projected a revenue growth of 16 per cent at USD 2.15 billion to USD 2.20 billion this year.

When asked about lower revenue growth forecast, Genpact CFO Mohit Bhatia said: "We clocked a revenue growth of 18.8 per cent last year helped by a full 12 months revenue from Headstrong."

In 2011, only eight months (May-December) of Headstrong revenus were accounted by Genpact, he added.

Genpact had acquired the Noida-based IT services company Headstrong for USD 550 million in 2011.

"We remain cautious, as are many of our clients, about the global economy in the near term, even as we see signs of improvement, and we are bullish on the long term," Tyagarajan said.

On short-term growth prospects, Bhatia said the overall economic environment in the US is showing signs of improvement, but some sectors are still sluggish.


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